Shop Your Rate Around
If you have done a fair job of estimating your costs and not given yourself an exorbitant salary, then you should have an hourly rate that doesn't scare off your customers. If it does, then take a hard look at your costs. Ask yourself:
- Do you really need that high a salary? Remember that if you've included your business costs in the overhead portion of the calculation, then you won't be paying for them out of your salary.
- Look closely at your overhead. Things like rent and electricity are paid monthly, but perhaps you can make do with a lower marketing budget. And it's not critical to buy new equipment as often as the amortization schedule says you can. For instance, I believe my office chair is amortized over 10 years, but I am making the assumption that it will last 50% longer - or 15 years.
- Can you work more hours in the year? If you have the business for it, one way to lower your hourly rate is to plan on working 50 or 60 hours a week. Remember that it's hard to expect that of your employees, however.
- If you're paying employees can you get a better deal from them? Perhaps one wants to go to half days?
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